Diplomatique.Expert Insights – The economics of football

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This article by Matthew Bugeja appeared first on Diplomatique.Expert (Edition 23) and is compiled by CiConsulta for Corporate Dispatch 

There are few words more synonymous with the word “scandal” in recent years than the international footballing body, the Switzerland-based FIFA.

In recent years, a number of high ranking FIFA officials have been investigated for bribery, over what has been seen as unusual regularities in the awarding of the 2018 & 2022 World Cups, which went to Russia and Qatar, respectively. A 2015 US investigation into the matter saw a number of FIFA officials involved in bribery, throwing the organisation into chaos. But the story has continued to rumble on, despite the passage of time. But that story is not over, and it hints at just how far some countries will go to gloss their national image on the international stage for political and economic purposes.

Just a few days ago, the President of French footballing giant Paris Saint-Germain, Nasser Al-Khelaifi was charged with criminal offenses around the awarding of media rights for several world cups. He is also the chairman of BeIN Media Group, a sports and entertainment network based in Qatar, along with being a member of UEFA’s Executive Committee. Former FIFA General Secretary Jerome Valcke was also charged with three offences, which included accepting bribes over TV rights.

This is a pretty big deal. FIFA is a large, and hugely influential global organisation. At the stroke of a pen, it can change the fortunes of countries desperate to host the tournament, which countries feel that their economy and tourism would improve from being allowed such an opportunity. Despite this assertion being brought into question by several experts, not least a project expert at the World Economic Forum, there is no denying that the immediate impact of hosting a world cup is enormous. Countries like Russia and South Africa benefited from being at the forefront of global media coverage for around a month, providing invaluable marketing to their countries as a tourist destination, although of course, at great cost from an infrastructural investment perspective, given how much money they had to spend in order to prepare facilities, stadiums and transportation links. FIFA has the ability to put a country on the map, and it has wielded that influence strongly in recent years.

However, it is also evident that FIFA is broken, perhaps hopelessly so. It is often mired in scandal, and its leadership has faced bribery and corruption charges and allegations for years.

Countries are at FIFA’s mercy, to some extent. Unlike many international political organisations, like the UN, or financial institutions like the IMF, FIFA does not depend on money from its members, making it less accountable and open to criticism. FIFA makes its money from broadcasting, marketing and licensing rights, bringing in huge revenues. When a World Cup is hosted, the costs are left to the host nation, which helps to keep its costs very low. It made $4.6 billion in revenue in 2018, and much of FIFA’s money is reallocated to its member countries into further football development and associated costs. This is commendable, but the lack of accountability, and the poor track records on criminal behaviour are certainly not.

The awarding of the world cups to both Russia and Qatar have been mired in controversy for a number of reasons. In order to host the 2022 World Cup, Qatar will have to host the event between the third week of November and the second week of December – this will considerably upend a number of European domestic and continental leagues, leading to headaches for fixture planners and team coaches alike. Qatar is a country that experiences blistering heat in the northern hemisphere’s summer, making it both very difficult and incredibly dangerous for athletes to be subjected to those kinds of conditions. But Qatar was awarded the tournament nonetheless, despite the loud protestations of league bosses, players, club owners and football teams.

Why?

The person might say that votes were effectively bought to have the World Cup in Qatar in 2022. In fact, a number of former FIFA executives, such as Sepp Blatter, have admitted that the decision to hold the World Cup in Qatar was a mistake. Certainly, this was not because the problems could not have been foreseen – but rather because FIFA was influenced through illicit means to award the tournament to a country with little footballing history, and an unfortunate human rights record.

Qatar is the richest country on earth using income per capita. It has little need for further economic investment, although one might say that it is trying to revitalise its reputation, after its falling out with Gulf countries such as Saudi Arabia over its relationship with Iran. Qatar will be centre stage for an entire month during the winter of 2022. It was a mistake, for so many reasons, but it is also a reminder that he who pays the pipers, picks the tune. FIFA may not rely on its members for funding. But that does not mean that its shameful past in choosing world cup hosts has not seen money change hands for its Executive members benefit.  That is not what football is about.

This article appeared first on Diplomatique.Expert (Edition 23) and is compiled by CiConsulta for Corporate Dispatch 

 

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